Systemic constraints were holding back South Africa’s economy and hampering efforts to jump-start growth and employment, Grant Thornton Cape managing partner Ian Scott said on Monday.

The latest labour force figures from Statistics South Africa showed that official unemployment had risen to a combined 37%, which included those people without work and those too discouraged to seek work.

“It is painfully ironic that we have chronic levels of unemployment, yet organisations are constrained from growing their business and the economy, because we lack the right skills. It is even more painful that these discrepancies could have been dealt with through prudent labour market policies and a more inclusive dialogue between labour, unions and employers,” Scott stated.

According to Grant Thornton’s 2013 International Business Report (IBR), the lack of skills was most severe in key industries that required higher-value employees, with the healthcare and technology sectors reporting the greatest concerns.

Sectors that had long suffered a lack of engineering qualifications, such as manufacturing and construction, also reported that the skills shortage was still a serious constraint.

Scott added that another area that had to be of concern to government, given the growing negative sentiment about service delivery, was a significant lack of necessary skills in the utilities sector.

“These are very real, structural issues that have to be addressed and with some sense of urgency. The outcomes of long-term solutions to these problems are only likely to become evident some way down the line, so the challenge for government is to find immediate solutions that can be applied in the short term, while building for the long term,” Scott said.

Meanwhile, the IBR also reflected a decline in business optimism from 74 points in 2007 to 44 points according to the latest results.

This was mainly as a result of economic uncertainty and the conclusion of labour negotiations, specifically in the mining sector.

Scott added that businesses needed confidence to grow and to invest in resources, specifically human resources, but said this confidence was “clearly lacking”.

“The survey results show that business has a surprising propensity to create jobs, with nearly half of respondents indicating that they had increased their headcount in the past year, compared with only 17% cutting staff numbers. Therefore, if the right foundations are put in place with the right skills available and more labour flexibility, business can more effectively drive employment growth,” he added.

This, in turn, would reduce the reliance on social grants and government subsidies, which currently supports about 40% of the population.